Editorial Note: Opinions and thoughts are the author’s own and not those of AFROTECH™.
The tech industry has faced a wave of shutdowns and layoffs over the past three years, but there may finally be some hope on the horizon. Recently, there’s been an upward trend in companies announcing M&A activity and plans to go public. These announcements not only matter to those who work at or invest in these companies, but they also create opportunities for those looking to break into the tech world—whether as employees or founders. While these signals point to progress, we must not lose sight of the challenges the industry has faced over the past four years—challenges that make even the smallest signs of change feel significant.
Following the COVID-19 pandemic, venture capital-backed startups experienced a surge in activity. Historically low interest rates made capital easy to borrow and invest, leading to increased funding for early-stage startups from venture capital firms. Crunchbase previously reported a 92% year-over-year increase in venture capital investment from 2020 to 2021, driving total global investment from $335 billion in 2020 to $643 billion in 2021. This boom wasn’t fueled solely by increased investment—it was also driven by the 2020-2021 rise in Special Purpose Acquisition Companies (SPACs). SPACs allowed tech and media companies to go public faster than through traditional IPOs. Popular companies like Buzzfeed, DraftKings, and 23andMe went public via SPACs. While the performance of these SPACs varied, many companies that went public this way have since experienced a significant loss in value. However, this still provided real liquidity for investors, founders, and employees. These trends led management teams to hire aggressively, believing they were ushering in a new era that would last indefinitely—but, as with all cycles, it eventually came to an end.
By early 2022, macroeconomic events began to shift investor and management outlooks on future growth prospects. The Ukraine war, coupled with rising inflation, prompted the Federal Reserve to raise interest rates, making capital more expensive to access. As a result, firms and companies became more conservative, leading to a sharp decline in venture capital investment over the past three years. KPMG Private Enterprise reported that global venture capital investment has dropped to its lowest level in nearly five years, with total investment in 2024 falling below Q2 2019 levels and deals resembling numbers seen in Q2 2016. With fewer dollars flowing into the ecosystem, the industry witnessed mass layoffs and company shutdowns reminiscent of the dot-com bust of the late ‘90s and early 2000s. Forbes previously reported that 428,449 tech workers were laid off between 2022 and 2023, with another 124,000 let go in 2024—bringing the total to over half a million jobs lost in the last three years. Although the past few years have been difficult, there are emerging signs that the future of opportunity in tech is beginning to trend in a more positive direction.
Well-known startups like Klarna, StubHub, and Chime have all announced plans to go public this year. An increase in public-facing companies like these will not only create liquidity for investors, founders, and employees—liquidity that can be reinvested into the ecosystem—but it will also instill a sense of confidence that opportunity is once again on the rise. When people feel optimistic about the future, they invest in it, and that investment activity creates even more opportunities.
Beyond the end of the IPO drought that has plagued the industry, there has also been a growing focus on companies that leverage AI to build apps and websites, rather than those focused on developing the foundational models used by others. Companies like Harvey, which uses AI to automate tasks for lawyers, have recently been valued at $3 billion, as reported by Fortune Magazine, while code assistant Cursor, created by Anysphere, has been valued at $10 billion, according to The New York Times.
This shift toward building AI applications will create new opportunities for Black technologists, whether they’re looking to build consumer-facing companies or join companies leveraging AI in verticals they’re passionate about.
The tech industry was once a space where people did whatever it took to break in, but in recent years, it has been an industry where simply surviving has been a challenge. However, the more companies that are acquired or go public, the more capital flows through the industry. And the more money that circulates, the more companies are built—ultimately leaving the industry in a better place.
